India Economy: Rough Ride Ahead

A potpourri of news articles...No Good news forthcoming.

OECD Country GDP (4.3%) in 2009

Economic activity is expected to plummet by an average 4.3 percent in the OECD area in 2009 while by the end of 2010 unemployment rates in many countries will reach double figures for the first time since the early 1990s, according to the OECD’s Economic Outlook Interim Report.

In the large emerging economies activity is slowing as access to international credit dries up, commodity prices fall and export demand weakens. Brazil’s GDP is expected to decline by 0.3 percent in 2009 while Russia’s is projected to fall 5.6 percent. Growth in India will ease back to 4.3 percent this year and in China to 6.3 percent.

India growth 5% in 2009: ADB

"Expansionary fiscal policies could impair the confidence of investors unless clear signals are given that the present large deficits are truly temporary," he said.

ADB urged the Indian government to review tax policy, the quality of public spending and the effectiveness of public programmes to ensure that it has room for the infrastructure and social sector spending that is necessary for achieving rapid, longer-term inclusive growth.

Indian Banks Strong: RBI

The high-level committee on financial sector assessment headed by RBI deputy governor Rakesh Mohan also forecast economic growth of 8% in the medium term.

"The capital-to-risk-weighted assets (CRAR) would reduce from 13% to 10.9% for a 244-basis point shock," it said, adding that only in case of 20 banks, which account for 36% of total assets, would the CRAR slip below the regulatory 9%.

Why are Indian Policy makers seeing rosy futures compared to their global counter-parts:  No one believes the 8% growth forecast...and if 36% of the banking system was under-capitalized in a further downturn I would be worried and not talking about stability.

But hey, that's me...